President Obama to End Pay-For-Delay?

Several months ago, we wrote about a bill called the “Preserve Access to Affordable Generics Act.”  This bill was developed to end the drug industry practice of paying off manufacturers of generic drugs because it delays the public’s access to lower cost generic drugs.  The pay-for-delay practice is back in the spotlight because President Obama recently proposed, in the 2012 budget, to ban this practice.  This proposal would save the U.S. $540 million in 2012 and approximately $8.8 billion through 2021.  The budget also contains a proposal to limit the amount of time that brand name drug makers have marketing exclusivity.  Under the current law, brand name drug makers have 12 years of marketing exclusivity and the proposal would limit this time period to 7 years.  According to the Obama administration, this change would save the U.S. $80 million beginning in 2015 and could result in savings of $2.3 billion from 2012 to 2021.

The White House argued in budget documents that these proposals are a way “to increase availability of generic drugs by providing the Federal Trade Commission authority to stop drug companies from entering into anticompetitive agreements intended to block consumer access to safe and effective generics, and hastening availability of generic biologics while retaining the appropriate incentives for research and development for the innovation of breakthrough products.”

These proposals will face an uphill battle if they are to remain in the budget.  Because these proposals are aimed at providing consumers with cheaper generic medications, it is not surprising that they were  immediately met with criticism by the pharmaceutical industry.  For example, a Pharmaceutical Research and Manufactures of America press release stated that “the President’s proposed restrictions on certain types of patent settlements could reduce incentives for future medical innovation.”

Abbey Spanier will continue to monitor these proposals and will report any significant developments.